Successor Employer Liable for FLSA Violation – Los Angeles Wage & Hour Claims Attorneys Blumenthal, Nordrehaug & Bhowmik

by Norman B. Blumenthal on January 17, 2013

  Employers who violate the Fair Labor Standards Act (FLSA) are liable to their employees.  A district court has now ruled that a successor employer is liable to its new employees for FLSA violations committed by the former employer.

In Paschal v. Child Development, Inc., CDI provided educational services to children in Arkansas.  A month after the nonprofit folded, plaintiffs filed a Class Action Complaint alleging that CDI did not pay the plaintiffs for work performed or expenses incurred.  When CDIHS took over for CDI, the plaintiffs attempted to transfer the complaint to CDIHS.  CDIHS filed a motion to dismiss the plaintiff’s suit on the grounds that since the successor employer was not in existence when the FLSA violation occurred, it cannot be liable.

Holding:  A successor employer may be liable for a FLSA violation if:

  1. There is a continuity in the business, and
  2. The successor employer was aware of the violations when it took over the company that committed the FLSA violation.

In determining there was continuity in the business, the district court noted that CDIHS was using the same facilities, employees, jobs, supervisors, equipment, and methods of production as CDI.  CDIHS also offered the same services as CDI.  Furthermore, CDIHS did not produce any evidence to show it was not aware that CDI had committed FLSA violations.  CDIHS’s motion to dismiss was denied.

If you are not being paid overtime and feel you have been misclassified as exempt from overtime pay, call an experienced Los Angeles labor attorney today at Blumenthal, Nordrehaug & Bhowmik at (310) 981-3918.  Blumenthal, Nordrehaug & Bhowmik is a California employment law firm with offices located in San Diego, San Francisco and Los Angeles. The firm dedicates its practice to contingency fee employment law work for issues involving misclassification as a salaried worker exempt from overtime, failure to pay vacation wages, misclassification as an independent contractor, off-the-clock work, wrongful termination, discrimination and other California labor laws.

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